Dear Helaine: My situation is a mixed bag. I’m currently an adjunct professor who somehow manages a decent -- $75,000 -- income. I’m 34. I have $80,000 in an IRA and another $20,000 in emergency savings. On the other hand, I still owe $10,000 on $75,000 in student loan debt. My profession is unstable, and I sometimes don’t know what I’m earning until all my classes are assigned. But I know my schedule for the next several months, so should I take out half my emergency savings and pay off the student loans, which otherwise have five years to go at $350 a month? They aren’t keeping me awake at night, but I would like to see them gone.
I’m quite conflicted. I am frugal, but I don’t deprive myself of simple pleasures -- I eat out with friends, and I travel at least twice a year. I think that paying off that debt will help me feel better about my financial situation. Also, I’d like to begin to save for a down payment on a home. What do you suggest? -- Feeling Trapped for No Sane Reason
Dear Trapped: I think you are obsessing about the student loan to cover for a bigger worry: You don’t have a steady source of income. Working as an adjunct at institutions of higher learning can be very fulfilling, but as you yourself point out, it’s less than predictable. You literally don’t know what you are going to earn the next semester -- or if you are going to earn anything at all.
And you are in your mid-30s, reaching an age where your friends are likely buying homes and otherwise getting more fixed in their lives. You, on the other hand, are going to find it tough going getting a mortgage even if you have a down payment in hand, because you can’t show steady income.
I wouldn’t pay off the student loan right now, but not for the reason you are thinking. I believe you need to keep the money in emergency savings, not just for an out-and-out emergency like an unexpected medical bill, but because you might need it to get started on the next stage of your life.
My advice? Give yourself a set period of time to get a tenure track position. And if that doesn’t happen, start contemplating another, more steady career where you can put your obviously well-developed skills to good use.
(To ask Helaine a question, email her at email@example.com.)
(EDITORS: For editorial questions, please contact Sue Roush at firstname.lastname@example.org)